Bill would bar agricultural tax breaks for pot producers

Marijuana producers in Washington would be prohibited from qualifying for agriculture tax breaks under a bill considered Tuesday by state lawmakers.

Officials estimate the industry could qualify for three dozen different tax breaks, largely surrounding agricultural production. A state House committee is exploring a bill that would block those tax breaks for 10 years.

Rep. Reuven Carlyle, D-Seattle, a sponsor of the bill, said it’s important that marijuana producers pay taxes so that lawmakers will have access to data in order to make better decisions in the future.

Carlyle said he doesn’t think the tax preferences were designed to help the marijuana industry, now under development after voters approved legalization in 2012.

“I don’t know that we have a problem in the marketplace that these exemptions would be designed to fix,” he said.

Officials estimate the new rules would increase state and local tax revenues by a combined $3.5 million over the span of one year.

Rep. Cary Condotta, R-East Wenatchee, said the bill could make it more difficult for the legal marijuana market to compete with the unregulated market. He noted that the product already will face some hefty taxes before it gets into a consumer’s hands.

“Why is this product different than any other ag product?” Condotta said.

Lawmakers have not scheduled any votes on the bill. It is one of a variety of proposed changes to the marijuana industry as the state works to implement the voter-approved law, find solutions to protect medical-marijuana users and satisfy the concerns of the federal government, which still considers marijuana a controlled substance.

Washington voters passed Initiative 502 in November 2012 to legalize and regulate the recreational use of pot by adults over 21, and the first state-licensed pot stores are expected to open later this year. The nation’s first recreational sales began Jan. 1 in Colorado, which legalized marijuana the same time as Washington.